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Mortgage sellers under investigation

29 November 2006
An investigation into four sub-prime mortgage brokers by the FSA (Financial Services Authority) has uncovered evidence of mis-selling.

The four have now been referred to the FSA's enforcement division for further investigation.

The FSA said the firms' brokers have distributed misleading promotional materials.

Sub-prime mortgages are provided to people with adverse credit histories and have much higher interest rates than other mortgage products.

FSA retail themes director Vernon Everitt said fair advertising in the sub-prime market was particularly important because "people are making one of the most important financial decisions of their lives".

"Financial advertising … must be clear, fair and not misleading, leaving people with a balanced picture," he stressed.

"We have found that poor advertising is a sign of wider problems in the way mortgage brokers are managed and controlled," he added.

Brokers' offences under investigation include charging fees well above the 'typical' rates cited in advertising and selling sub-prime mortgages to borrowers who could qualify for a mainstream loan.

For more information about bad credit mortgages, click here.

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